Sunday, February 06, 2005

Weekly Outlook

There are a few important economic reports and many significant corporate earnings reports scheduled for release this week. Economic reports include (Mon.)-Consumer Credit (Wed.)-Wholesale Inventories (Thur.)-Trade Balance, Initial Jobless Claims, Continuing Claims and Monthly Budget Statement. The Trade Balance and Monthly Budget Statement have market-moving potential.

Some of the more important companies that release quarterly earnings this week are: Mon. - Allergan(AGN), Biogen Idec(BIIB), Cendant(CD), Clorox(CLX), Electronic Data(EDS), Humana(HUM) Tues. - Cisco Systems(CSCO), Computer Sciences(CSC), Marriott International(MAR), Toll Brothers(TOL), Adolph Coors(RKY) Wed. – American International Group(AIG), Cigna Corp.(CI), Whole Foods Market(WFMI) Thur. – Aetna(AET), Caesar's Entertainment(CZR), Dell Inc.(DELL), May Department Stores(MAY), Office Depot(ODP), XM Satellite Radio(XMSR) Fri. - Marsh & McLennan(MMC). There are also a few other events that have market-moving potential. The Thomas Weisel Tech Conference(Mon.-Wed.), CSFB Financial Services Conference(Tues.-Thur.), Merrill Lynch Global Pharmaceutical/Biotech/Medical Device Conference(Tues.-Thur.), Merrill Lynch Computer Services & Software Conference(Tues.-Thur.), Fed's Stern speaking(Thur.), the Fed's Bernanke speaking(Fri.) and Fed's Yellen speaking(Fri.) could also impact trading this week.

Bottom Line: I expect US stocks to finish the week higher on declining energy prices, more optimism, rebounding tech shares, a stabilizing US dollar, low long-term interest rates, short-covering, better fund inflows, strong earnings reports and more constructive Fed comments. While a test of January's lows will likely come at some point during the first half of the year, stocks should continue working higher over the near-term. The S&P 500's p/e on '05 estimates is 16.91. This is reasonable, in my opinion, considering the current fundamentals. My short-term trading indicators are giving mixed signals and the Portfolio is 125% net long heading into the week.

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